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Cowell weighs in on state tax policy

RALEIGH — Janet Cowell has been state treasurer for two years.

As such, the former state senator from Wake County hardly enjoys the kind of bully pulpit that the late Harlan Boyles, who held the office for nearly a quarter century, once did.

Even so, Cowell recently embarked on a Boyles-like course.

She gazed beyond the walls of her immediate confines, beyond her concerns of state debt and pension fund investments, to weigh in on the broader issue of state tax policy.

Cowell joined the call for reforming North Carolina’s tax structure, largely unchanged since the Great Depression, by broadening the tax base.

Over the past few years, policy watchers and wonks have had a hard time not rolling their eyes when hearing another call for tax reform. As long as I’ve been covering the North Carolina General Assembly, since the late 1990s, a handful of Democrats and Republicans have been talking about the issue.

“It’s a strange spring ritual,” Cowell herself remarked about legislators’ recent tendency to study tax reform and then fail to consider a bill on the subject.

Missing from the talk and studies has been some state leader with real political capital willing to spend it on the issue, willing to explain to a larger audience why tax reform is needed and how it might work. At the end of the day, Democratic state Sen. Dan Clodfelter, the legislative champion of tax reform, is just a single legislator from Charlotte elected by one-fiftieth of the state’s population (and now he’s in the minority party in the legislature).

Cowell is a statewide officeholder. Sure, as a first-termer her political capital is a bit limited, her pulpit a bit out of the spotlight.

Even so, she is the first statewide officeholder to take up the tax reform cause.

Cowell recently told a group of Wake County business leaders that if state leaders didn’t work together to push tax reform that “the upcoming legislative session will be a failure.”

The argument for tax reform is simple: In an economy that has become increasingly service-oriented, a sales tax base focused on goods will continue to erode, and a complicated tax code with myriad interpretations of taxable income becomes unfair and inefficient.

Besides broadening the sales tax base, Cowell’s proposal calls for changes to personal and corporate incomes taxes, simplifying and eliminating some tax credits and deductions.

It would require corporate taxpayers to perform what is known as “combined reporting,” preventing multistate corporations from shifting income to other states but also doing away with a penalty-driven system that companies complain is arbitrary.

Like earlier proposals, Cowell’s plan would be revenue-neutral, meaning that taxes overall wouldn’t rise. With services taxed and income tax deductions eliminated, rates would be lowered to bring in the same amount of revenue.

Whether the state treasurer can help tax reform gain traction, and turn it into more than the butt of jokes inside the Legislative Building, remains to be seen.

At least she’s trying.

Scott Mooneyham writes about North Carolina politics for the Capitol Press Association.

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